Analyst Expects Nvidia to Leave Chipset Business Next Year.

Even though Nvidia Corp. is still one of the leading suppliers of core-logic sets in the industry, the pressure from Advanced Micro Devices and Intel Corp. is likely to eventually force the company out of this market. Yet another analyst on Monday said that next year Nvidia would officially pull out from competition against AMD and Intel on the core-logic market.

“Our checks confirm that Nvidia has decided to exit the chipset market next year,” said Pacific Crest’s analyst Michael McConnell in a report from clients.

This is hardly the first time when Nvidia is rumoured to exit the chipset business, but while the company is usually quick to deny such a move, the number of analysts expecting it points to the fact that Nvidia at least has intentions to reorganize its chipset division.

Currently chipsets account for 21% of Nvidia revenue, which is a result of over 7 years of operation. But when Nvidia first entered the chipset market there were no strong chipset division at AMD, but were struggling chipset designers Silicon Integrated Systems Corp. and Via Technologies. Moreover, neither AMD nor Intel planned to integrate graphics cores and some other input/output logic into central processing units (CPUs). In addition, even two years ago Intel did not have a very broad chipset portfolio for its chips as now, which leaves Nvidia less space under the sun. Finally, Nvidia’s chipsets lag behind those from AMD and Intel in terms of time-to-market these days, which makes them less preferable among system integrators.

Mr. McConnell also noted that due to “fallout from defective notebook GPUs,” the company’s share of the notebook market would drop below 50% once Intel’s refreshed Centrino 2 “Montevina” platform ships in the second quarter of 2009. The analyst asserts that a negative pre-announcement on results for the fiscal third quarter that ends in October “appears imminent”.